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With just days to go before the start of the new AMP cycle, Ofwat has acknowledged flexibility in its own working will be needed during the coronavirus outbreak.
Setting out its ambitions for the coming year, the regulator said its priorities and timings will be kept under review as the impact of the virus on resources becomes clearer.
Ofwat said partnerships will be increasingly important as the water sector faces challenges old and new. Both itself and the industry must adapt.
The regulator’s overarching goals over the next five years, based on its ‘Time to act, together’ strategy are to transform company performance; drive them to address the long-term issues of climate change, population growth and changing customer expectations; and for firms to provide greater value for customers, society and the environment.
It plans to achieve the first goal by developing a richer understanding of company performance and “taking swift and targeted action”.
Ofwat said it will review and update its regulatory approach to reflect learnings from the PR14 and PR19 processes. It will consult with companies and other stakeholders and publish its findings after July. It said it has developed early views on a long-term approach to regulating regional monopolies and will track the outcome to assess the effectiveness of its actions.
Towards the end of 2020, Ofwat will begin the consultation process for PR24, exploring initial proposals and areas that may require more scrutiny.
The regulator said it wants companies to look at the challenges they face in a different way and is considering options to encourage creativity such as an innovation hub. It will revealed that the first competition for its innovation fund will take place by the end of 2021 and kick off over the winter of 2020/21 “at the latest”.
Over the coming year and into the future, Ofwat will focus more on delivering customer expectations for the water sector and its role in preserving the environment.
It said it is developing and building regulatory and analytical tools to assess how companies are contributing to society and the environment and incentivise them to do more. It emphasised the importance of protecting and improving the environment in Ofwat’s policy agenda.
The regulator outlined its spending for the year, which it said covered “a much broader range of work than we have undertaken in previous years at this time in the regulatory cycle” including the work of RAPID and the Thames Tideway project.
From a total budget of £31.4 million collected from license fees, Ofwat allocated £29.6 million to core business, £1.3 million to water supply and sewerage licensing and half a million pounds to the Thames Tideway.
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